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BRIAN WILLIAMS, MSNBC ANCHOR: The man who planned to take down a jetliner with the explosives in his shoes. Tonight, the Justice Department says he is the real deal with ties to the al Qaeda network.

The government deadline for the airline security crackdown. It happens this Friday at an airport near you. But is it a sham? Is it going to be any safer to fly? Eight thousand miles from home and in big trouble. A live report tonight from Guantanamo Bay, home to a new batch of prisoner.

And Enron at issue tonight and the question: Are corporate executives getting away with murder financially? Who should pay for what happened to everyone connected to that company?

ANNOUNCER: From NBC News, this is THE NEWS WITH BRIAN WILLIAMS.

WILLIAMS: Good evening.

When the first reports came in on that Saturday night over the holidays that a man had allegedly tried to light a crude fuse heading to his shoe on board a commercial airliner, he did not appear to be a serious character to a lot of people, certainly not the kind of highly motivated and apparently highly trained terrorist that created the kind of hell of September 11th in this country.

But, today, the U.S. Justice Department told a different story about the almost pathetic-seeming man who was photographed in the back seat of that car being led away from the airport that night in Boston. They say Richard Reid was trained, in fact, by the al Qaeda network, and they’ve now charged him with a number of counts, enough, in fact, to guarantee a lifetime stay in jail, if guilty.

Before we look at the safety of air travel in this country, including the changes that are coming up this Friday, our look at this suspect tonight begins with NBC News justice correspondent Pete Williams.

(BEGIN VIDEOTAPE)

PETE WILLIAMS, NBC JUSTICE CORRESPONDENT (voice-over): A federal grand jury today accused Reid of receiving training from an al Qaeda terrorist camp and then trying to kill a planeload of people with explosives hidden in his shoes.

Until today, Reid had been charged only with interfering with the flight crewmembers who spotted him trying to ignite the shoe bombs on an American Airlines flight from Paris bound for Miami three days before Christmas.

JOHN ASHCROFT, ATTORNEY GENERAL: Reid’s indictment alerts us to a clear, unmistakable threat that al Qaeda could attack the United States again.

P. WILLIAMS: Among other charges, the grand jury accuses Reid of attempting to use a weapon of mass destruction, using a dangerous weapon against the flight crew, and attempting to destroy an airplane. All carry a maximum sentence of life in prison.

The attorney general and the FBI director say the quick action by the flight crew proves that the government’s frequent threat warnings paid off.

ROBERT MUELLER, FBI DIRECTOR: An observant and responsible public is as much a partner to effective law enforcement as any other activity we in law enforcement undertake.

P. WILLIAMS: Meantime today, U.S. law-enforcement officials say they’re studying the contents of these computer, apparently left behind in Afghanistan by al Qaeda members as U.S. forces closed in, in hopes that the contents might shed new light on what Reid was up to.

“Wall Street Journal” reporters bought the computers in Afghanistan and spent weeks decoding and translating the thousands of file they contain. They found one document detailing the travels of an al Qaeda operative called Brother Abdul Ra’uff whose apparent mission was to scout potential terrorist targets in Israel and Egypt, but “Journal” reporters say that operative’s movements appear to match those of Richard Reid right down to the issuing of replacement passports in the same cities.

ANDREW HIGGINS, “THE WALL STREET JOURNAL”: It was a fairly compelling circumstantial evidence that this is the same person.

P. WILLIAMS (on camera): The computer material has been turned over to federal investigators who say it likely does describe Richard Reid, but they say they’ve found nothing definite yet to prove it.

Pete Williams, NBC News, at the Justice Department.

(END VIDEOTAPE)

WILLIAMS: For more on “The Wall Street Journal“‘s reporting on the similarities between Richard Reid and an al Qaeda operative, we are joined now by the newspaper’s foreign editor. John Bussey is with us tonight from “The Journal“‘s temporary bureau in Lower Manhattan.

John, run through, first of all, what is known about those similar to Richard Reid? Are there any fears at the highest level of the U.S., to your knowledge and the paper’s knowledge, that there are more guys like him out there?

JOHN BUSSEY, “THE WALL STREET JOURNAL”: Well, this story in “The Journal” today by Andy Higgins and Alan Cullison certainly leaves you with that impression.

It’s mostly about a scout who’s been sent out to scope out a variety of possible locations for additional terrorism, not just in the United States. They mentioned the U.N. building. But, in Israel, they mentioned the Wailing Wall and bus depots in Egypt and along the border with Canada where they say, “Look, there are some nightclubs up there where U.S. servicemen frequent.”

So you’re left with the impression that—while there’s—the details are about this one individual who appears to be on some circumstantial evidence Richard Reid, because his itinerary was precisely the same, you’re left with the broader feeling, Brian, that “My gosh, these people are really quite organized. They’re quite intent, and there’s probably more of them.

WILLIAMS: And yet, John, this one fellow, Mr. Reid, as a solo actor, was, you’d have to admit, not very impressive. In fact, we used the word “pathetic” at the top of the broadcast.

He proved once again that the best and only air marshals really that you can count on these days are the citizens who fly on jets. A doctor was able to subdue him with ease.

And is this their best shot?

BUSSEY: Well, it’s probably not their best shot. I mean, we saw a—an extraordinary shot on September 11th. I mean, who would have thought?

You know, the other thing about Richard Reid is I probably have a different opinion about him. I mean, he comes across as a bumbler. rMD+IT_rMDNM_In these correspondences in the story, he’s quite precise. He’s very careful. He covers his tracks very well.

And after all, I think that we were probably seconds, if not than nanoseconds, away from that American Airlines jet blowing up over the ocean. We might right now, Brian, be really reporting about all sorts of speculation. Could it have been a bomb that blew that plane up? It was, you know, a wreckage across the bottom of the ocean, had it not been for the extraordinary luck of a flight attendant wandering by when he lit the match.

WILLIAMS: And point taken about that and the shot that we did take as a nation September 11th. It’s the very fact you’re in a temporary bureau talking to us tonight and not the old venerable headquarters of “The Wall Street Journal”.

John, how worried, baseline here, should Americans be specifically vis-a-vis the reporting “The Journal” has uncovered?

BUSSEY: Well, the end of the files show a—an al Qaeda seemingly in disarray, quite disappointed that Muslims around the world hadn’t risen up. This—these were files that Andy and Alan found dated after September 11th.

So you’re left to feel that while there is disarray—bin Laden’s on the run, his lieutenants are on the run, one has been killed—on the other hand, somewhere between 1,000 and 5,000 people went through those training camps over the years, and as we’ve found in Indonesia, they’re already training other people.

So I think that caution, surveillance, and concern and nervousness are probably smart characteristics to have in the weeks and months ahead.

WILLIAMS: So 170 names of al Qaeda people included in these files. It starts to become a staggering amount of data, a staggering number of characters for the U.S. to track at once.

BUSSEY: Yeah. And the U.S. says—they’ve had a look at the files and at the computers. The U.S. says, among that 170 that—just mentioned in the today’s paper, a lot of new names, people that they didn’t know were al Qaeda listed in the files.

WILLIAMS: John Bussey, thank you very much as always. The foreign editor of “The Wall Street Journal” concerning their reporting in today’s paper.

Remember this so-called shoe bomber was stopped before, questioned once for so long in the airport, he missed his flight originally. But he was ultimately sadly welcomed back on board a commercial flight.

This Friday, two days from now, a tough new aviation security deadline goes into effect in this country. It is fairly apparent tonight two things are going to happen. There will be no great increase in air security. There will be maddening and intolerable delays perhaps across this country.

We have a reality check on this tonight from NBC rMDNM_News correspondent Robert Hager.

(BEGIN VIDEOTAPE)

ROBERT HAGER, NBC CORRESPONDENT (voice-over): Today, the government vows to meet the new airline security laws deadline of this Friday for screening all checked luggage at airport nationwide. Two months ago, Transportation Secretary Norman Mineta said it couldn’t be done. Today, he says it can and will.

NORMAN MINETA, TRANSPORTATION SECRETARY: We will do everything humanly possible to keep these promises.

HAGER: But security experts say there are not nearly enough people, enough bomb-sniffing dogs, or enough explosive-detection machines to really screen more than a small fraction of the four-million bags checked each day. So how can they say they’ll meet deadline?

(on camera): Only because the law permits what some call a huge loophole. Until next year, it allows airlines to say they’ve screened bags if, instead, they simply do what’s called bag matching, ensuring that every bag checked belongs to someone who actually takes the same flight.

(voice-over): It’s based on a theory that no one would plant a bomb aboard the same flight they’re flying. But critics say that’s now nonsense.

PAUL HUDSON, AVIATION CONSUMER ACTION PROJECT: Bag matching doesn’t make complete sense since 9/11 since we now face the threat of suicide terrorists.

HAGER: And airlines will only be required to bag match for a passenger’s first flight, meaning that, for connecting flights, a potentially lethal checked bag could slip aboard, even if the passenger it belongs to doesn’t. Is that really screening?

HUDSON: They should just honestly admit that they haven’t met the deadline and talk about what deadline they can meet.

HAGER: But, today, airlines and the government say this is all they can realistically do for now.

CAROL HALLETT, AIR TRANSPORTATION ASSOCIATION: We anticipate that it’s going to be a pretty smooth start-up.

HAGER: But will require some sacrifices.

Delta says, come Friday, it will no longer take checked bags closer than a half-hour before flight. United warns no more switching flights at the last minute.

A true 100-percent screening will not be required until the next deadline, the end of this year, when the law says every checked bag will actually have to go through an explosive-detection device.

Robert Hager, NBC News, Washington.

(END VIDEOTAPE)

WILLIAMS: For more now on what’s in store for airline passengers come Friday—there’s a lot to talk about on this subject and whether flying will really be any safer by, say, Saturday morning—we are joined now by a man who spends much of his life on airplanes or at least talking about them, aviation consultant and safety expert Mike Boyd. He is of counsel to several carriers. He is with us tonight from Denver.

Well, Michael, where to begin? How—how pathetic do you find this, the changes we’re about to see? How much of a Band-Aid is it going to be?

MIKE BOYD: Well, I think the DOT has created a physical impossibility. This is a four-chunk, four—a four-link chain. Every link is the weakest link. You’ve got bag matching, you’ve got screening by dogs, you’ve got screening by hand, and you’ve got screening by machines, none of which works real well. It is a scam. There’s no question about it. It’s a sham.

WILLIAMS: So far—it occurred to me listening to Bob Hager’s report for the second time tonight that it’s the passenger who are going to be out here at least short term, and by that, I mean this: no switching flights last minute, no last-minute bags being checked on to flights. We don’t see the airlines being out that much yet because, of course, the equipment hasn’t arrived in the airports and really won’t be for quite some time.

BOYD: Well, that’s true, and the equipment they’re ordering, these CT machines, aren’t going to work very well when they do get them there. There’s such credible evidence that keeps coming in that these things really don’t screen very well. So, come December 31st, if anybody thinks we’re going to be even more secure than we are today, you can just forget it.

The fact is we need some leadership that’s going to go in the right direction, and what we saw today with bag matching—keep in mind that probably 65 percent of all flights—probably more than that, more like 70 percent—have connecting passengers on it. So bag matching isn’t going to do a thing to make us any more secure from terrorists.

WILLIAMS: And we—we can’t say this enough. Bag matching might have worked before the days when we knew there were people who thought nothing of blowing their selves up on board a commercial airliner.

BOYD: Absolutely. And—and for the government to tell us that bag matching is screening for explosives is purely ridiculous. All it does is just try to assume that the person on the first leg of the flight isn’t going to blow themselves up. None of it makes any sense.

And the other three options, the way they’re put together—this isn’t multilayered. It’s just—it’s just multi-amateur. That’s the only way of putting it.

WILLIAMS: I have seen airline passengers who have been through two- and three-hour lines just to go through X-ray to board a plane. It’s reality. It’s happening in this country. They have so far, by and large, been very good and patient citizens.

I need a prediction from you on what Friday’s going to look like around this country, what Saturday’s going to look like, and are people going to go with the program?

BOYD: Well, I think it may be smoother than you think because the real—the real down side would be the matching of the initial bag. I think they can do that better than we might expect. At least I hope so.

But the real issue is all these silly stories where they stick a microphone in the person’s face and say, “Do you mind this delay?” “Oh, no. I’m all for this delay if it means more security.”

What the question really should be is “How foolish do you feel standing in this line when this hasn’t improved security at all?” Then I think we’d have a different answer from the public.

WILLIAMS: Mike, a larger question but not at all beyond your ken. Have thing gone back to normal too quickly? And by that, I mean the people throwing up their hands, saying, “Look, these X-ray machines just can’t be built quickly.”

I was reminded before we went on the air, the United States built a liberty ship every two days for a four-year period during World War II. It can be done.

BOYD: Well, these machine they’re trying to buy probably have the technology of a liberty ship. We’re buying the wrong machines. We’re buying machines that can’t do it. We’re buying politically connected machines rather than machines that can screen for all kinds of explosive and other things in baggage. We’re going in the wrong direction, not the right direction.

We can do it, but the FAA, the DOT, and the government and Congress simply don’t have the gumption to do it, and I don’t think they have the ability to do it right now. But it’s a leadership issue, not a technology issue.

WILLIAMS: I know you’re not a political analyst, but is that leadership you’re calling for at the presidential level—does this president need to make a Rooseveltian address to a joint session of Congress and a national audience watching at home to get it in the right gear?

BOYD: Well, I think what he has to do—it’s his staff doing it. Let’s face it. Since 9/11, Americans cannot be proud of what they’ve seen coming out of the Department of Transportation. What he should do is tell Norman Mineta to go find another job someplace and fire the FAA administrator.

Let’s be real blunt here. They haven’t done a very good job, and it’s time to stop playing politics and start worrying about security because—again, look at breach after breach after breach, and they say we have enhanced security.

Look at that speech today from Mr. Mineta. It was a joke. This is my life and yours and the American public’s. We need to start taking it seriously. Mr. Bush needs to move on that.

In rural Virginia tonight, authorities say a law student who opened fire at his school had just been suspended just today. Three people were killed, including the school’s dean, and three others were injured at the tiny Appalachian School of Law in Grundy, just a few miles south of the Kentucky/West Virginia state line.

We get latest now from NBC News correspondent Kevin Tibbles.

(BEGIN VIDEOTAPE)

KEVIN TIBBLES, NBC CORRESPONDENT (voice-over): Shots rang out at 1:00 this afternoon on the campus of the tiny Appalachian School of Law. By the time the shooter was overpowered, three people were dead, three others wounded.

Police say the 43-year-old suspect is a student from Nigeria who failed last year and who was suspended from school this morning.

UNIDENTIFIED MAN: He was kind of a loner, and it was hard to approach him. He was very closed off.

TIBBLES: The shots fired execution style, according to police, from a semi-automatic handgun.

The dead include the dean of the law school, L. Anthony Sutin, a former member of the Clinton administration’s Justice Department. The father of two young children, former law partners say he had a huge heart.

One faculty member and a student were also shot dead, the three injured students rushed to nearby hospitals.

(on camera): State police in Virginia are crediting law students at Appalachian for preventing further loss of life, saying they overpowered the gunman and held him until police could arrive.

PAUL LUND, ASSOCIATE DEAN: The whole community is profoundly shocked and saddened by this tragedy. We extend our heartfelt sympathy to the family and friends of the victims.

TIBBLES (voice-over): The Appalachian School of Law opened in 1997 to encourage young people in this traditional coal-mining region to study and practice law. It is housed on the campus of a former junior high school and boasts just 170 students and 15 faculty.

A trauma unit has now been set up on the tiny campus to counsel those who have lost friends. A memorial service will be held at the school tomorrow.

Kevin Tibbles, NBC News, Chicago.

(END VIDEOTAPE)

WILLIAMS: There is a lot more to tell about as we continue after a pause this Wednesday night, including new information on the collapse of Enron and new questions tonight about just how much Andersen accounting really knew about the downward-headed Texas giant. At issue, who should pay for what happened to all those Enron employees who lost everything?

And coming up next, the latest on the American war effort in Afghanistan.

And more tonight on the new battleground shaping up in the Philippines.

(COMMERCIAL BREAK)

WILLIAMS: The Pentagon called another 2,400 reserve troops to active duty, we found out this week. That brings the total number of reservists who have been mobilized since September 11th to more than 70,000 now tonight. The move comes as the U.S. military presence in the Philippines continues to build this evening.

We get details now from NBC News Pentagon correspondent Jim Miklaszewski.

(BEGIN VIDEOTAPE)

JIM MIKLASZEWSKI, NBC PENTAGON CORRESPONDENT (voice-over): Even as the war in Afghanistan and the hunt for Osama bin Laden grind on, the U.S. military build-up in the Philippines is well underway.

As of today, some 250 U.S. military forces have arrived. The total number could reach 800 to help the Philippines military destroy Abu Sayyaf, a terrorist group with known ties to Osama bin Laden.

DONALD RUMSFELD, SECRETARY OF DEFENSE: There is no question that there had been linkages between al Qaeda and activities that have taken place in the Philippines.

MIKLASZEWSKI: But Defense Secretary Rumsfeld says the Philippines is only the next stop in America’s war on terrorism.

RUMSFELD: If we have to go into 15 more countries, we ought to do to it to deal with the problem of terrorism.

MIKLASZEWSKI: In Afghanistan, coalition forces still dealing with the potential threat from weapons of mass destruction. It was revealed today that, last week, a British military team outside Kabul unearthed a sinister-looking set of canisters at first believed to contain radioactive material.

RUMSFELD: Externally, they’ve got stuff on them that make reasonable people think there’s something not good in there, and we’re going to check them out.

MIKLASZEWSKI: Tests reveal, however, the material is harmless. In fact, the U.S. military has inspected 45 sites and has still found no evidence Osama bin Laden has produced chemical, biological, or radioactive weapons.

But still no sign of America’s two most wanted: Taliban leader Mullah Omar or Osama bin Laden.

(on camera): Military officials here at the Pentagon now believe that some Afghan tribal leaders know exactly where to find Mullah Omar but refuse to give him up. As for the whereabouts of Osama bin Laden, they readily admit it’s still anybody’s guess.

Jim Miklaszewski, NBC News, the Pentagon.

(END VIDEOTAPE)

WILLIAMS: Yet another shipment of prisoners has arrived tonight at the U.S. air base in Cuba, Guantanamo Bay. They are all al Qaeda and Taliban veterans, and they are 8,000 miles from home tonight, bringing the number of prisoners housed there now to 80.

A late update from NBC News correspondent Soledad O’Brien who is at Guantanamo Bay.

SOLEDAD O’BRIEN, NBC CORRESPONDENT: Brian, this afternoon, a C-141 landed on the airstrip here at Guantanamo Bay in Cuba. On board, the 30 detainees making the approximately 20-hour-long journey from Kandahar.

The men came off the cargo plane, each one wearing an orange jumpsuit, wearing blacked-out goggles, bound at the hands, shackled at the feet. The Navy has been adamant that we show no pictures of these detainees. They say for security reasons.

We can only tell you that there is a lot of security here, obviously. The men were patted down and then led to one of two really regular school buses. The windows of the school buses blacked out as well. Apparently inside, the seats removed, meaning that the detainees would sit on the floor of the school bus.

Taken to a ferry and then taken off the Camp X-Ray where they are expected to spend the next three months or so.

Earlier today at a briefing, Brigadier General Michael Leonard said that, in addition to the 80 detainees now here at Guantanamo Bay, they are also building more units—and quickly—in the effort to house another 600 or so. He also praised the base medical team, saying that they had been working in the face of some threats from the detainees.

(BEGIN VIDEO CLIP)

BRIG. GEN. MICHAEL LEHNERT, U.S. JOINT TASK FORCE COMMANDER: These are not nice people. Several have publicly stated here their intent to kill an American before they leave Guantanamo Bay. We will not give them that satisfaction.

(END VIDEO CLIP)

O’BRIEN: That medical team also investigating some health concerns. It is suspected that some of the detainees may have tuberculosis, and so they are wearing surgical masks. That’s in an effort to protect the Marines that are guarding them.

There has been no interrogation of the detainees as of yet.

The International Red Cross is expected to arrive here tomorrow to examine the conditions under which the detainees are being kept. Brian, back to you.

WILLIAMS: Soledad O’Brien of NBC News from the place they call Getmo (ph), Guantanamo Bay in Cuba, tonight. Thanks.

When we come back, two nuclear powers on the brink of war. Tonight, what it’s all about and what Colin Powell is doing to keep the peace in that region.

And the latest on that blind lion in Afghanistan, how an outpouring of American support is making a very real difference tonight.

(COMMERCIAL BREAK)

WILLIAMS: Welcome back to the broadcast at half past the hour.

New criminal charges tonight against Richard Reid, the man suspected of trying to blow up that American Airlines flight over the Atlantic Ocean last month with explosives hidden in his shoes. A federal grand jury today accused Reid of being an al Qaeda-trained terrorist and indicting him on nine separate accounts, including attempted murder and attempted use of a weapon of mass destruction, as they called it.

Secretary of State Colin Powell is in South Asia tonight where he will review U.S. troops in Afghanistan later this week. But, first, he is trying to help Pakistan and India reach some sort of middle ground before the two nuclear nations come any closer to conflict over the border region of Kashmir.

ANDREW MITCHELL, NBC CHIEF FOREIGN AFFAIRS CORRESPONDENT (voice-over): Colin Powell on a mission to avert another war. This time between India and Pakistan, both armed with nuclear weapons.

COLIN POWELL, SECRETARY OF STATE: We need a campaign against terrorism, not a campaign with these two countries fighting one another.

MITCHELL: It is almost mission impossible. Today, just as he arrives in the region, India raises the stakes, hints that its submarines are already armed with nuclear warheads, a threat Pakistan cannot match.

ADM. MADHEVENDRA SINGH, INDIAN NAVY: The Navy is fully (UNINTELLIGIBLE), its powder is dry and we are ready.

MITCHELL: And Pakistan warns today that even a small incident can spark a chain of events that could be disastrous. And that’s exactly why Powell is here.

POWELL: We want to find out ways to de escalate militarily, de escalate some of the political and diplomatic steps that have been taken in recent weeks.

MITCHELL: What will he propose? When he arrives in India tomorrow night he will ask India to reverse its decision to close the border, and lift restrictions on Pakistani flights over its territory, if these first steps work then possibly a troop pullback. But here is the problem Powell faces: India still wants satisfaction for a suicide bomb attack on its Parliament, India claims staged by Pakistani terrorists. Powell, who has been working both sides hard with almost daily phone calls, got a major concession last week from Pakistan’s President Musharraf. On Saturday, he declared war on his country’s terrorists.

PERVEZ MUSHARRAF, PAKISTANI PRESIDENT: Pakistan will not allow its territory to be used for any terrorist activity anywhere in the world.

MITCHELL: As of tonight, he has arrested almost 2,000 militants, outlawed radical Islamic groups, cracked down on religious schools that recruit young boys into the terrorist ranks.

But it is a high-risk strategy. Pakistan’s leader faces challenges from Taliban supporters in his own government.

(on camera): To help prop him up, tonight Powell invited Musharraf to visit President Bush for the first time in Washington. But that gesture will surely infuriate India, creating even more challenges when Powell lands there tomorrow night.

Andrea Mitchell, NBC News, Islamabad. (END VIDEOTAPE)

WILLIAMS: More on this: Along India’s border with Pakistan tonight, tension remain high, the outbreak of war still a very real threat.

NBC News correspondent George Lewis has that angle of the story tonight from Kashmir. (BEGIN VIDEOTAPE)

GEORGE LEWIS, NBC CORRESPONDENT (voice-over): Every day, at the only border gate between India and Pakistan, a ritual symbolizing the armed face-off between the two nations. Indian and Pakistani soldiers meet at sundown to lower their respective flags, with crowds of angry demonstrators on both sides shouting epithets.

CROWD: Pakistan!

CROWD: India!

CROWD: Pakistan!

CROWD: India!

LEWIS: The tension between India and Pakistan has spurred the biggest military buildup in 15 years. Why? They’re fighting over the divided state of Kashmir, framed by the Himalayas, a beautiful place with an ugly history of armed conflict. It’s been the scene of two wars and constant hostilities; 35,000 have died.

And now the armies are on full alert once again. The military buildup intrudes on the serenity of nature. India, mostly Hindu, occupies 45 percent of heavily Muslim Kashmir. Pakistan, also Muslim, has about a third of the territory, and China the rest. The U.N. called for free elections so the Kashmiris could choose whether they wanted independence. But those elections have never been held because India blocks them.

Now thousands of refugees run from border areas, as Muslim separatists operating from Pakistan attack the Indian side. These border villagers show off the bullet holes in their buildings and the scars on their own bodies.

(on camera): The people here have turned quite militant. They say they’re fed up with the Pakistanis using their village for target practice. But a war is about the only way to get rid of the problem.

(voice-over): The mood is also ugly in this Hindu refugee camp.

UNIDENTIFIED MALE: We want only war.

LEWIS (on camera): You want only war.

UNIDENTIFIED MALE: Yes, we want only war. War is the solution.

LEWIS: War is the solution?

UNIDENTIFIED MALE: Yes.

LEWIS (voice-over): Back at the border crossing, the soldiers end their ceremony by slamming the gates closed, even as Colin Powell and other diplomats try to keep the doors open to negotiations aimed at averting war.

George Lewis, NBC News, Kashmir. (END VIDEOTAPE)

WILLIAMS: When we come back here tonight, the collapse of Enron: The auditor who ordered documents destroyed is now helping investigators, but how much? And “@Issue” tonight: What about the executives who cashed in and left so many employees wiped out? Should they have to pay for it? (COMMERCIAL BREAK)

WILLIAMS: Readers of a lot of major daily newspapers in this country woke up this morning to find a full-page ad from Andersen Accounting. The ads are part of the big-five accounting firm’s efforts to prevent its role in the collapse of energy giant Enron from leading to its own collapse. But that’s possible.

We get the latest on the investigation into Andersen and the latest on Enron from NBC News correspondent Lisa Myers. (BEGIN VIDEOTAPE)

LISA MYERS, NBC CHIEF CONGRESSIONAL CORRESPONDENT (voice-over): Today, the auditor who repeatedly certified Enron’s false financial reports, David Duncan, is grilled for more than four hours by congressional investigators, that as his former company, the Andersen accounting firm, places full-page newspaper ads to try to contain the damage.

The ads admit an error in judgment in the Enron case, say Duncan has been fired, and promised Andersen will do what is right.

JOSEPH DIGENOVA, FORMER FEDERAL PROSECUTOR: Arthur Andersen is doing the only thing it can do right now, given its position, which is a very bad position to be in.

MYERS: Late today, more trouble for the firm: Congressional investigators uncover a new memo, which they say shows the Enron whistle-blower who alerted Enron management to potential accounting scandals also called an Andersen partner in August, who immediately relayed her concerns to senior management.

So far, Andersen’s explanation is that it didn’t know all the facts about Enron. It has blamed David Duncan for what wrongdoing it admits, shredding of thousands of documents. But another new document, a report from Enron’s law firm, Vinson & Elkins, suggests Andersen headquarters knew plenty. The law firm wrote in October that all material facts about controversial partnerships used to hide Enron debt were disclosed and reviewed by Arthur Andersen and that experts at the Chicago headquarters were consulted.

DIGENOVA: The memo from Vinson & Elkins is damaging, severely damaging to Arthur Andersen, because it would undercut their argument that Mr. Duncan was acting as a rogue partner.

MYERS: Andersen earned $1 million a week serving as both Enron’s auditor and consultant, what critics say was a conflict of interests. Now Andersen is fighting for its own survival, facing huge potential claims by Enron investors and, experts say, a potential co-conspirator in a criminal case against Enron.

A former top securities regulator says the company could be in big trouble.

LYNN TURNER, CENTER FOR QUALITY FINANCIAL REPORTING, COLORADO STATE UNIVERSITY: I think we’re going to turn around and find that Andersen, to some degree, is going to be found culpable in this situation.

WILLIAMS: Perhaps no one has been hurt in the Enron collapse as much as the company’s employees, including many who lost everything, their life savings gone. “@Issue” tonight: Will Enron’s demise turn out to be a crime without punishment? Should the U.S. have tougher laws to protect investors? Or should Enron’s investors and employee have done a better job watching their own interests?

For more, we are joined now from New York by documentary filmmaker and author Michael Moore, best known as the writer, director and star of “Roger and Me,” the story of the General Motors chairman and his hometown of Flint, Michigan. He is also the author, we should point out, of a new book, “Stupid White Men.” And it comes out next month.

Also with us from New York tonight: James Glassman, investment columnist for “The Washington Post,” a fellow at the American Enterprise Institute, and author of a new investment guide, “The Secret Code of the Superior Investor: How to be a Long-Term Winner in a Short-Term World.”

Gentlemen, welcome to you both.

And, Michael, I would like to begin with you. For all those of us who have worked for what we have today, this enrages people to read about, to hear about. However, investing in stock, even in a retirement plan, is not a passbook saving account. It is for serious-minded adults who know what they’re doing and know how to assume risk. What, in your mind, should come out of this?

I mean, this company, Brian, these executives, they knew things were going south, and they went and they took this money for themselves, knowing that all the workers at this company were going to be left with nothing. And I just can’t believe that—I mean, there are people in prison right now in California for stealing a slice of pizza, and they’re in there for life. And the fact—to think that these guys could even get away with this.

And the connections, I don’t want to—let’s not forget the connections here, because too many people right now are saying, well, the Bush administration, they didn’t do anything wrong. Evans and O’Neill have come out and said: Well, they called us and we didn’t do anything to help them.

Well, what about their silence? If they got a call from Enron for help back in the summer and in the fall, and they didn’t tell anybody or didn’t do anything, I mean, that right there makes them complicit in this crime. And, if I could just take a second, Brian, let’s just break it down. Who is Paul O’Neill, our treasury secretary? He is the former CEO of Alcoa, the third largest contributor to the Bush campaign—Enron, the No. 1 contributor to the Bush campaign.

Who is the lawyer—who is the law firm for Alcoa? Vinson & Elkins. Who is the law firm for Enron? Vinson & Elkins. Don Evans, who got the other call from Enron, our commerce secretary, who is he? He’s the former chairman of Tom Brown Inc., an oil and gas company worth $1.2 billion. He was also the finance chairman of the Bush campaign that collected the money from Enron and Alcoa. They’re all connected in this. Let’s not forget this.

WILLIAMS: There are a lot of ties here.

James Glassman, is it two separate issues? Some bad guys probably did some very bad things. And some people probably will see life inside a cell before this is all over. What to do about the risk that people assumed and the losses that regular people who woke up in the morning, went to work and came home, are now suffering?

JAMES GLASSMAN, “THE WASHINGTON POST”: Right.

As far as the executives of this company are concerned, they obviously will be investigated. There could be fraud charges. There could be insider-trading charges. Charles Keating got 150 months sentence in prison. The Cendant executives are now under indictment. This is what happens in this country. And it’s the right thing.

Now, what happens to the employees? They have suffered, certainly, because many of them owned big chunks of stock in their own companies. The company stock was in fact given to the employees as a matching donation for their 401(k) plans. It mounted up so that it was far too big a chunk to have in a retirement account for any one stock. The question is: Whose responsibility is that?

And I would say that it’s very important for employees, for people who are watching this show today, to understand that they have responsibility themselves for their own retirement plans. That’s what they should do.

WILLIAMS: But what about the employees who wanted to dump out, wanted to cash out?

GLASSMAN: OK.

The way that the Enron retirement plan worked, which is quite similar to the retirement plan of most large companies, is that, if you bought the Enron stock yourself for the part of the retirement plan where you made your own contributions…

WILLIAMS: Discretionary, right.

GLASSMAN: Right. It was discretionary. You could move that any time you wanted. You could take it and put it into Fidelity Magellan or into bonds or whatever you wanted.

However, the part that Enron gave you as a matching grant, you could not move until you were 50 years old. After that, you could move it as much as you wanted. Then there was one period lasting two weeks, or 10 trading days, when there was a freeze because there was a change in an administrator. Now, that ought to be investigated. There might be some hanky-panky. However, the stock at that point was already down to $14. It went to $10. So that probably didn’t hurt too many people, that particular freeze.

WILLIAMS: Michael Moore, back up to one of your points. Not many people will give you an argument: This ship was sinking. They knew it on the bridge. They didn’t tell the people in the engine room.

To your point, seventh largest company in the country is sinking—if I read you correctly, they’re damned if they do, damned if they don’t. If they called the White House and somebody had raised their hand and said, “Look, I just got a call from Enron and they’re failing,” that would have been a problem because it would have showed collusion. You’re saying that it was bad that no one did raise their hand and say, “Look, I got a call from the seventh largest company in the country and they’re failing.”

MOORE: Right.

They got a call. They knew they were failing. And they probably also knew that the executives were forming these 3,000 partnerships, sending all this money offshore. You know, they had to have known that this was going on. And that’s when they, our elected officials, the people in Bush’s Cabinet, should have done something to protect these employees.

But, to answer your question…

WILLIAMS: Does that mean government, Michael? Does that mean new safeguards for people who buy stocks, 401(k)s?

MOORE: Oh, yes, absolutely.

And, Brian, here’s the irony of this. Enron and Kenneth Lay, its chairman, Lay had his own little—almost little corner office in the White House in the early days of the Bush administration, because, if you wanted a job in the Energy Department or the regulatory commissions, you had to be interviewed first by Kenneth Lay.

GLASSMAN: That’s complete nonsense.

(CROSSTALK)

MOORE: May 25, “New York Times,” it’s right there.

WILLIAMS: Go ahead, James.

GLASSMAN: He didn’t vet every energy employee.

Let me tell you something about Enron. The single most important issue for Enron—and “The Washington Post” recently reported this—as far as their trading income was concerned, would have been the passage of the Kyoto agreement. Ken Lay lobbied both administrations very hard, especially the Bush administration, and didn’t get what he wanted. So the Bush administration was not a wholly-owned subsidiary of Enron or anything close to that.

Second, it is completely untrue that people at the White House knew that there were all sorts of these, what are called special-purpose entities that were set up by Enron to take some of its debt off the books. That’s the issue.

MOORE: Nobody in America believes that, James—I’ve got to tell you something—because Kenneth Lay was a good friend of George Bush’s.

GLASSMAN: Oh, so he was telling him all about how their books were set up?

MOORE: The Enron jets flew Bush around the country during his campaign in 2000. The Enron jets flew him during the primaries.

GLASSMAN: Michael, if he was such a good friend of Bush’s, why didn’t he bail the company out, as Ken Lay requested?

(CROSSTALK)

MOORE: Because it was so far gone at that point. Believe me, these people who hate the federal government—”Oh, we want less regulation. We don’t want control. We want to be left alone, free enterprise”—as soon as they start to go under, whether it’s Ken Lay or the airlines or whatever, they go running to the federal government for their welfare.

(CROSSTALK)

WILLIAMS: We are officially calling time here in New York.

Gentlemen, thank you both very much. We’ll do this again. I see an hour on Enron in our future.

Michael, we’ll have you back when “Stupid White Men” comes out, because, after all, we all can name many.

Thank you both, gentlemen.

Financial troubles at Kmart are worsening tonight. Shares of the company sank almost 35 percent to $1.60 a share. It was dropped from the S&P 500 index. Kmart officials announced a week ago that the company would, at best, break even in 2001. But this looks bad. Industry analysts are now speculating Kmart, the jewel of the one-time Kresge family, could file Chapter 11 and would be the biggest retail bankruptcy in history.

That, combined with other disappointing corporate profits and earnings forecasts on Wall Street, helped push down markets, both of them, considerably today. The Dow was off by more than 211 points to close at 9712. Nasdaq lost 56 to finish at 1944.

We’ll be back with more right after this. (COMMERCIAL BREAK)

WILLIAMS: We are back with a look at the morning newspapers.

Let’s begin with overseas, really, with “The International Herald Tribune,” but an issue of great interest, of course, to travelers all over the world, especially those in a certain set that can pay a lot to fly much faster across the Atlantic. The official report from the French government is out now on the Air France Concord crash. That was July of 2000, you’ll recall.

It confirms what a lot of people have long suspected. Debris on the runway—and they’re saying from a Continental Airlines jet that took off prior—caused this crash. The report criticizes maintenance procedures of both Air France and Continental. Continental, by the way—and as you might expect—is saying good luck proving that that piece of metal in question came from specifically a Continental aircraft. But it’s believed it was somehow ingested. And you’ll also recall the Concords have been all retrofitted with different tires, bladders, engine parts to prevent that particular mishap from happening again.

“Washington Post”: Health reports indicate that, for the Hart Senate Office Building, the second time was the charm, meaning the injection of a kind of poisonous gas. They tried once. They tried twice. The Hart Senate Office Building, which is home to about roughly half of the U.S. Senate, is now being declared ready for occupancy after two tries at detox after the anthrax scare. That was where the first major scare was on Capitol Hill.

“L.A. Times” reporting three former member of the SLA, the Symbionese Liberation Army, best known for their abduction and the alleged mind-washing of Patricia Hearst, the young heiress, three members of the SLA have been arrested in connection with a fatal bank heist that was 27 years ago. In 1975 in April, a man died during the commission of that bank robbery.

And “USA Today” is reporting the Charlotte Hornets basketball team could be moving to New Orleans. The Hornets have been trying to get a better deal out of the city of Charlotte and get a new arena out of it. It looks like they may take their act on the road. It will all be announced, apparently, on a radio show tomorrow.

We’re going to take a break and come back with a mind-bending mistake out of the state of Florida. (COMMERCIAL BREAK)

WILLIAMS: The good folks in Lauderhill, Florida came very close to making a grievous error. On Saturday, they are all set to honor Shakespearian-trained actor James Earl Jones. The problem: The plaque they commissioned to present to the actor is made out instead to the man who shot and killed Dr. Martin Luther King, James Earl Ray. Further, the plaque really lays it on, thanking the assassin for—quote—”keeping the dream alive.”

The Texas company that made the plaque is promising a new one by Saturday’s festivities. That would be good. In one of the best understatements of this still young year, 2002, they have called it a copy error. Let’s go ahead and join them in honoring James Earl Jones this coming Saturday.

That’s it for us tonight. Coming up next on MSNBC: the broadcast “A REGION IN CONFLICT WITH ASHLEIGH BANFIELD”—substituting tonight, Forrest Sawyer, live from the Philippines.

That is our broadcast for this Wednesday evening. I’m Brian Williams, NBC News. Thank you for being with us. We’ll look for you right back here tomorrow evening. Good night, everyone.